Some doubt that the American stock market will have good times in the next six months or a year. This is confirmed by the figures of hedge funds, which are increasingly skeptical about the recently observed big rally that broke out amid a bear market.
Hedge funds' net short positions on S&P 500 futures reached a record $107 billion last week. Selling S&P 500 futures is a common way to bet against the broader stock market. However, it should be understood that this may also be part of a hedging strategy.
Bearish bets continue to pile up rapidly as the S&P500 has been rising for more than a month, bouncing more than 17% from its 52-week low since June 16. Economic data pointing to easing price pressures has bolstered confidence that the Federal Reserve controls inflation. However, no matter how strong the market rally is, it is viewed with great skepticism.
According to S3 Partners, after the June low of the S&P 500, sellers eventually covered their short positions by $45.5 billion. The largest coverage of short positions in dollar terms occurred in the consumer goods and technology sectors.
This suggests that many view the recent upward movements of the market as a "bearish rally" and expect a pullback in stock prices across the market - if the recession continues or worsens.
Premarket:
As for short-term movements, the shares of Chili's and Maggiano's restaurant chains fell by 8.1% in the premarket after the company failed to show a good quarterly profit due to higher costs. It also issued a lower-than-expected forecast for the full year.
Nordstrom shares fell 13.2% in premarket trading after the retailer cut its annual forecast, saying that the number of visitors decreased at the end of the last quarter and that it is actively working to reduce inventory levels – so much for high inflation.
Bed Bath & Beyond securities rose 15.6% in premarket trading after the Wall Street Journal reported that the home goods retailer had allocated funding to maintain its liquidity. Let me remind you that last week the shares collapsed to record lows.
Advance Auto Parts shares dropped 6.5% in the premarket due to a weak assessment of future forecasts. The auto parts retailer said inflation and rising fuel prices harmed its business in the 2nd quarter.
The securities of Farfetch, a specialist in luxury goods e-commerce, rose 15.9% in the premarket after a deal to buy 47.5% of the online fashion store YNAP from the Swiss Richemont for more than 50 million shares of Farfetch.
Bulls managed to defend the $4,116 level on the S&P500 today. In the event of repeated downward movement after weak statistics, the breakdown of $4,116 will provide a direct road to the area of $4,090. The pressure on the trading instrument may decrease as the index approaches fairly important support levels, breaking below which will not be easy – provided buyers are in the market. It will be possible to talk about a new index growth only after controlling the resistance of $4,150, which will pave the way to $4,180 and $4,208. This is the only way we will see fairly active growth in the $ 4,229, where large sellers will return to the market again. At a minimum, there will be those who want to lock in profits on long positions. A more distant target will be the $4,255 level.
